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MARSHALLS RETAILERS FEEL HEAT OF COMPETITION

Submitted by Anonymous on Tue, 01/07/2003 - 00:00

MAJURO, Marshall Islands (Marianas Variety, Jan. 7) -Local business leaders predict that without government intervention, some of the largest locally owned retail firms in the Marshall Islands will be out of business within the year, victims of an increasing number of Asian-owned companies.

The pressure of dozens of recently opened businesses, a slow economy, the money drain out of the country, and unsupportive government policies are combining to put even the biggest Marshall Islands retail stores in jeopardy.

While most local businesspeople are reluctant to publicly discuss details, they say that in the next six months, changes among some of Majuro’s biggest retail operations are expected that would have been unthinkable just a handful of years ago.

And whether some of these large locally owned retail businesses survive another year in their present form may depend on the national government taking a proactive role and offering a financial bailout, say several local businesspeople.

Marshallese-owned companies are suffering the impact of a previous government’s policy of selling passports to Asians. In the early- and mid-1990s, about 2,000 passports were sold, largely to people in China, Hong Kong and Taiwan. Beginning in the late 1990s, dozens of these naturalized Marshall Islands citizens began moving to Majuro and establishing businesses. More Asians without Marshallese citizenship followed, arriving on one-month visitors visas, and then staying for years. During 2002, the Marshall Islands began tracking down and starting deportation proceedings against about 50 visa overstayers from China — many of whom had stayed on after visas expired in 1999 and 2000.

What Majuro has been hit with, said Robert Reimers Enterprises CEO Ramsey Reimers in an interview Friday, is the reality of globalization. It’s unfair to blame the Asian businesses that have proliferated in Majuro in the last several years for all of the woes of local companies, he said. "It’s a new business environment" but one that neither local businesses nor the government have successfully adapted to, says Reimers.

Since it was first established in 1950, Robert Reimers Enterprises grew in the 1970s to become the mega-business for the Marshall Islands, with retail and wholesale stores, hotel and restaurant, car sales, ship agency, scuba dive operation, water bottling, and pearl and clam farms. But now the retail side is struggling in the face of cheaply priced Asian goods imported by the mostly Chinese-run stores, many of which appear — on the face of their retail prices — not to be paying taxes.

Reimers said the biggest problem Marshallese businesses have in competing with the recently arrived businesses is their relative lack of money. Because the Asian-owned stores have strong financial backing, they can afford to keep larger inventories on hand, and absorb short-term losses. "So whatever business is available, they get it because they have the product on island," Reimers said.

Reimers believes that the future for his company lies in manufacturing — the water bottling, pearls, clams — and in tourism. But, he noted, most local companies are strictly retail/wholesale, so they don’t have options.

Chinese businesses and Chinese-made products may be taking over the Majuro market, but that’s only a microcosm of what’s happening internationally with inexpensive "made in China" exports dominating many markets around the world, Reimers said.

For local companies to survive in Majuro’s "globalized" economy, it’s going to take active support from the government, said Reimers and other local businessmen who asked not to be named.

Other local businessman said they see other problems:

• Many recently arrived Asian firms are avoiding taxes and illegally importing goods that gives them an unfair price advantage over the local companies that pay taxes.

• A huge amount of U.S. dollars are now flowing out of the country each month to Asia, instead of recirculating several times within the local economy as in the past.

• A larger number of Marshall Islanders are living in the U.S. and receiving nuclear test compensation or Kwajalein missile range payments — money which used to circulate in the country but now goes directly overseas.

Pacific Islands Report is a nonprofit news publication of the Pacific Islands Development Program at the East-West Center in Honolulu, Hawai‘i. Offered as a free service to readers, PIR provides an edited digest of news, commentary and analysis from across the Pacific Islands region, Monday - Friday.